Quebec restaurants steaming over retroactive liquor tax

Restaurateurs in Quebec say the latest provincial budget has handed them a hangover-sized headache.

The budget, tabled Wednesday, not only announced a tax hike on wine, spirits and beer, but it also made the tax retroactive, so that it applies to all the liquor that retailers already have in their cellars.

The hike in so-called “sin taxes” targets such things as tobacco and alcohol. The governing Parti Quebecois – who took power in September – says the extra tax will help the province rake in an additional $33 million in 2012-2013, and another $100 million in 2013-2014 and 2014-2015.

As of Wednesday, Quebec restaurants will have to pay an extra 50 cents per litre for wine and liquor, as well 17 cents for a litre of beer – or about 5.8 cents a bottle.

But if that weren’t enough, the government says the tax applies retroactively to every unopened bottle in the cellars and fridges of all of the province’s restaurants and bars. What’s more, the government wants the restaurants to go through all their inventory right away and pay off the extra tax on their old stock by Dec. 22 – just as the businesses are caught up in the holiday rush.

For a restaurant like Taverne, in Montreal’s NDG neighbourhood, it’s all too much. Owner Barbara Irwin says her restaurant has quite a large inventory of liquor and wine at the moment.

“When you're purchasing private import wines, you do have to purchase them in bulk, because they won't be available down the road,” she explained to CTV Montreal.

She says she also built up a large stock because the SAQ, the government-owned corporation that has a monopoly on the sale of alcohol in Quebec, recently offered some attractive specials, and Taverne decided to stock up.

So now, while Irwin’s customers enjoy glasses of wine upstairs, she herself will be counting bottles downstairs – something she says she should have been doing early Wednesday morning, which she didn’t realize.

“Apparently, we're supposed to fill out this form and I should have done inventory last night at 3 a.m., which I had no idea,” she says. “It would have been nice for them to give us a little heads up on that.”

Quebec Finance Minister Nicolas Marceau says it's a common measure and that owners will pass on the tax to consumers.

Restaurants in Quebec have already been hit by higher food prices in recent months and higher costs associated with the price of gas going up. This new tax on beer, wine and spirits might mean that prices in restaurants will also go up.

Willliam Gogas, owner of Restaurant Lafayette in Montreal’s downtown, says that's not an option. He says if he raised his prices, he’ll lose customers.

The whole thing doesn’t make sense to him, he says.

“It's appalling, unfair. I mean, I purchased something three months ago, a year ago and now I'm going to pay taxes on it?” he asks.

The Canadian Restaurant and Foodservice Association agrees that the retroactive tax is unacceptable and will badly hurt an industry that already contributes significantly to the province’s economy.

“It's not a way to look at this industry, which is over $10 billion a year, over 200,000 people that are working in it. We are supposed to be an ally with any government in creating jobs and they bash us with this,” says the CFRA’s Jean Lefebvre.

The CFRA plans to pressure the government to back down on what they say is a less-than-hospitable plan.